Emotion analytics is the process of tracking one’s emotions. It is an important tool in trading psychology and is used by some very sophisticated traders. The importance of understanding your internal state as a trader can not be understated. If you have unacknowledged and unmanaged emotion that is strong it will impact your trading. There is no way around it.
For example, an angry trader will be more prone to an impulsive or reckless entry. Even boredom is an internal state that can impact your trading, possibly causing you to take an impulse trade or enter with poor location due to impatience.
Most traders direct most or all of their attention to the screen. The problem is that our internal state acts as a filter to our perception of the market. We don’t see the market as it is, we see the market as we are.
What do you think would happen if you tracked your internal state as closely as you track the market? You would not only see patterns in the market, but you would see patterns of internal states that correspond to your performance as well as corresponding to market patterns.
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